Key GST Changes Effective from October 1, 2025 – Explained by B N Modi & Associates LLP
The Goods and Services Tax (GST) framework in India is undergoing one of its most significant transformations since its inception. Starting October 1, 2025, multiple procedural and compliance changes have come into effect, reshaping how businesses manage Input Tax Credit (ITC), credit notes, and tax liabilities.
At B N Modi & Associates LLP, we believe that staying informed is the key to staying compliant. Here’s a complete breakdown of the new GST rules effective October 2025, their impact, and the action steps every business must take.
1. ITC Auto-Population Stopped – Manual Verification via IMS
Until September 2025, Input Tax Credit was automatically reflected in GSTR-3B based on data from GSTR-2B. From October 2025 onward, this auto-population feature has been discontinued.
The Invoice Management System (IMS) has been introduced to bring transparency and accuracy to ITC claims. Now, taxpayers must manually accept, reject, or mark invoices as pending before they can claim ITC.
Only accepted invoices will be eligible for ITC in GSTR-3B.
Implications:
• Businesses must actively verify every invoice from suppliers.
• Reconciliation between IMS and books becomes mandatory each tax period.
• Pending invoices must be acted upon within the specified time limit — one month for monthly filers, one quarter for quarterly filers.
2. GSTR-3B Liability Fields Locked – No Manual Editing Allowed
The GSTN has implemented “hard locking” for GSTR-3B starting October 2025. This means that auto-populated values (especially tax liability from GSTR-1 or IFF) are now non-editable.
Any correction or amendment must be made through GSTR-1 or GSTR-1A, not by editing GSTR-3B manually.
Purpose:
This change eliminates mismatches between outward supplies reported in GSTR-1 and the tax paid in GSTR-3B. It encourages accurate reporting from the start and prevents post-filing alterations.
Impact:
• GSTR-1 accuracy becomes critical; any error will automatically carry into GSTR-3B.
• Taxpayers can no longer modify output tax manually.
• Amended entries will need to be filed in the next GSTR-1 cycle.
3. Credit Notes & ITC Reversal – Now Interlinked
Another major update links credit notes with ITC reversal. Earlier, suppliers could reduce their tax liability upon issuing a credit note — even if the recipient had not reversed the corresponding ITC.
Under the new rule, suppliers can reduce output tax liability only after the recipient reverses the related ITC through the IMS portal.
Purpose:
To ensure both supplier and recipient make corresponding adjustments — preventing double benefits and mismatches.
Impact:
• Suppliers must coordinate with buyers before issuing credit notes.
• Buyers must reverse ITC promptly after accepting a credit note.
• Detailed records of each credit note and reversal are essential for compliance and audits.
4. “Pending” and “Remarks” Options in IMS
The Invoice Management System allows taxpayers to mark invoices or credit notes as “Pending” if verification is incomplete. They can also add remarks for rejecting or keeping an invoice pending.
This feature promotes transparency and better communication between suppliers and recipients.
Time Limit:
• For monthly filers: pending status can be held for one tax period.
• For quarterly filers: pending status allowed for one quarter.
After this period, an action (accept/reject) becomes mandatory.
5. Partial ITC Reversal – Only to the Extent Availed
The new rule clarifies that if ITC was availed only partially, reversal is required only for the portion actually availed. This prevents excess reversals and promotes fair adjustment.
Example:
If an invoice was worth ₹1,00,000 + ₹18,000 GST, and you availed ITC on ₹50,000 only, reversal is required on ₹9,000 — not the full ₹18,000.
6. Legal Backing for the Changes
These reforms stem from:
• Finance Act (No. 7) of 2025 – amendments to Sections 34 and 38 of the CGST Act.
• Rule 60 and newly inserted Rule 67B of the CGST Rules.
• GSTN Advisory dated 23rd September 2025 on IMS implementation and workflow.
Practical Action Steps for Businesses
- Reconcile invoices regularly between IMS, GSTR-2B, and accounting books.
2. Accept or reject invoices promptly in IMS to avoid ITC blockage.
3. Communicate with suppliers to ensure correct GSTR-1 reporting.
4. Train accounting staff on new IMS functionalities and deadlines.
5. Maintain detailed records of ITC reversals, remarks, and pending items for audit readiness.
6. Review ERP and software systems to integrate IMS data tracking and alerts.
Conclusion
The GST changes effective October 2025 aim to create a more transparent, controlled, and technology-driven tax ecosystem. While these updates increase compliance responsibilities, they also bring higher accuracy, reduce mismatches, and ensure fairness in ITC claims.
Businesses that proactively adapt to these changes will benefit from smoother compliance and fewer GST notices.
At B N Modi & Associates LLP, our team of experienced professionals can help you navigate the new GST framework, implement reconciliation systems, and stay compliant with every regulatory requirement.
Contact us for professional GST advisory and compliance support.